From the time that the Toyota Production System (TPS), or lean production system, was recognized globally, it was clear that it was only one part of Toyota’s successful business system. For example, The Machine that Changed the World (1990), written by James Womack, Dan Roos, and me, described the superior performance of this production system, which brought together production, supply chain, product development, and selling to create an approach very different from conventional corporate strategy. Still, it took a while before many fully understood that lean production is a part of a more comprehensive lean business system — a perspective Jeff Liker emphasized in The Toyota Way (2004) and other subsequent books.
… lean production is a part of a more comprehensive lean business system …
Over time, it also became clear that viewing the lean system, or TPS, solely as a new set of tools and principles that “experts” could use to design more efficient and integrated horizontal processes misses its real potential. Lean thinking and practices challenge the assumption that only experts should design, maintain, and improve processes and that line management’s job is to ensure operator compliance. It also challenges the focus on asset utilization and point optimization, which comes from big organizations’ vertical, functional deployment of knowledge and resources. And it challenges the Western assumption that technology is the only way to integrate the sequence of work to design, make, and deliver a product — Toyota achieved this integration well before such information technology (IT) became available.
More critically, however, we’ve come to understand that adopting lean methods is not merely about defining a new “best practice” or system versus point optimization. Instead, it is about seeking accelerating, dynamic economies through engaging everyone — shop floor and management — in using scientific problem-solving to define and continually improve their work, supported by engineers and technology. Michael Balle and the other coauthors of the 2017 book The Lean Strategy presented this argument. So, lean principles, practices, and tools are learning frames that help develop individuals’ and teams’ capabilities, ensuring they can solve the next set of problems and create and build the next-generation product and production systems and future innovations.
We now also understand that having an entire workforce with these problem-solving capabilities makes it possible to integrate value streams without relying on batches, queues, and buffers. In other words, it is capable teams that make streamlined horizontal value streams work in changing circumstances. So, ultimately, lean is a people-centric learning system requiring a very different management system, as described by Michael Balle and colleagues in 2006 in their article “The Thinking Production System.”
Value-stream analysis is a powerful way of visualizing the potential gains from lean practices. But, to realize these gains, leaders must build problem-solving capabilities from the bottom up, one step at a time. Otherwise, line managers will again resort to compliance with systems devised by experts. Moreover, developing these capabilities challenges the traditional assumption that strategy can be separated from execution. Lean leaders must lead this execution themselves rather than relying on experts to do it for them.
Lessons from Dissemination
Today we can draw some conclusions from research and experimentation over the past 30 years. The first conclusion is that lean production practices work in all activities — well beyond high-volume manufacturing. But although most of the tools and practices are relevant, the starting points and sequence in which they are used to unlock the benefits are very different. For example, while high-volume automotive manufacturing starts with standard work and flow, producing consumer goods begins by separating the tail from high-volume products. Retailing starts with basket fulfillment and rapid replenishment, whereas service and repair begin by turning unpredictable into predictable work. Healthcare starts by unblocking discharge and making the work plan visible. And so on.
The second conclusion is that things are changing as we move from the era of stable technologies, economies of scale, long supply lines, and big systems. Initially, lean practitioners saw lean practices as a way of improving the performance of these “legacies of mass production” — big factories, big warehouses, big supermarkets, big airports, big hospitals, etc. Hence the focus on lean production.
But big factories are beginning to be challenged by distributed production closer to customers. Big warehouses are becoming hubs for rapid replenishment. Convenience stores and home shopping are replacing big supermarkets. Point-to-point flights are bypassing hub airports. And overloaded district hospitals are likely to give way to local treatment centers and medical support in the home, described in Lean Solutions (2005).
These changes shift the focus from production to distribution and customer service activities on the one hand and engineering, development, and the rapid scaling up of new products and services on the other. Lean management is central to rapid replenishment and managing all kinds of service delivery. Still, it’s critical to understand that Toyota’s focus was this broad all along, from the beginning of its development of the TPS. For example, Toyota created an incremental four-year development cycle, which has evolved into a superior process for rapidly scaling up new technologies rather than depending on making the occasional giant leap, as described in Designing the Future (2019). Both approaches, though, are, of course, needed in a rapidly changing world.
The third conclusion is that, on the one hand, we have achieved widespread awareness of lean across the world, but on the other, lean programs have often been challenging to sustain over time. Very often, this was because external consultants or internal lean teams controlled lean training, redesigned the work and the value streams, and then told frontline teams what to do. As a result, the frontline teams did not sustain the initial successes after the experts had left. (This also happened after the roll-out of Six Sigma programs.) Consequently, many organizations end up using lean teams as cost-cutters or firefighters.
To avoid this, organizations must build a daily management system in which line management learns to help teams to define their standard work as a baseline for improvement, make plan-versus-actual visible, and engage everyone in problem-solving to respond to deviations and to make improvements. To do this, line management and their teams learn by doing, using the plan-do-check-act (PDCA) process through a mentored dialogue using the A3 process in alignment with corporate objectives using a hoshin framework.
In this process, learning is very focused on a specific issue. However, the cumulative experience of repeated learning cycles enhances the organization’s ability to formulate insightful hypotheses and possible countermeasures rather than jumping to solutions when tackling problems.
But even lean programs that build a daily management system sometimes fail when top management is distracted by other matters. This situation happened at Tesco after 2011. Sir Terry Leahy headed a top team with significant experience running stores and distribution centers, and all the directors spent one day a week in Tesco’s operations every week. As a result, they could quickly understand the potential of the operational improvements revealed by pilot projects for the rest of the business.
As Tesco grew, the next chief executive, Philip Clarke, chose to focus on expanding Tesco’s newly acquired operations worldwide and rely on bigger IT systems to improve its operations. And when these failed to deliver, it took a change of leadership in 2014 to recover by going back to basics and refocusing on the UK market.
Successful lean leaders often realize they must lead lean efforts themselves after witnessing them run into the sand. They also recognize the value of having an experienced lean sensei as a dialogue partner to help them, as described in The Lean Sensei (2019).
Future Challenges
The shareholder-first business model is increasingly being questioned today. It is no longer credible to ignore the externalities like the impact of the organization on the environment and the challenges from climate change and to rely on workforce compliance from an increasingly skilled workforce that does not share in the profits from dominating markets. Moreover, at the operational level, organizations are full of wasted time, effort, and costs and are slow to respond to change.
The lean business model offers an alternative. It enables organizations to gain a competitive advantage by helping them be better at helping customers to meet their needs and retaining them rather than dominating markets and controlling customers. In addition, the lean business model is better and quicker at developing and scaling up new product technologies that meet the changing needs of our time. For example, Toyota was the first to commit to replacing the internal-combustion engine and, more recently, to transform itself into a mobility provider. The company also has one of the most comprehensive environmental assessment systems guiding its progress to making its products and operations carbon neutral.
Leaders who use the lean approach to operations are also not driven by the desire to replace people with technology and systems. Instead, they see the intelligent use of technology as enhancing rather than replacing human decision-making. For example, Toyota’s operations continue to evolve — most recently, by replacing some robots in assembly with humans, developing very simple physical-assist measures instead of powered devices, and creating a completely new and highly flexible modular production line, Takaoka Line 2.
Nevertheless, we still have a lot to learn from the Toyota example.
Editor’s Note: This Lean Post is an updated version of an article published on March 13, 2020.
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I am a believer in the Lean movement and an admirer of Dan Jones and his article, but I cannot help feeling that the movement has lost its way.
Depending on who one talks to, Lean is nearly half a century old, and yet and yet, LEI is still offering courses in Lean basics. Why has Lean not penetrated the Teflon coating of the Friedmanites (you might call them Neoliberals), as Dan suggested, and to which Bob Emiliani has called attention?
Should we delve into the mindsets of the majority of leaders to whom Lean is just another (failed?) initiative? Should we ask ourselves if a Friedmanite can be a good Lean leader as described by Dan? I think not. One can divide leaders into two separate categories: those who believe in their customers and those focused myopically on maximising profits in order to fill their own boots.
The former makes reasonable profits and sustains the organisation in good health by understanding their customers, their workers and the societies in which they live. To them profits are important but are the profits made by providing societies with things (services included) they need?
The latter is obsessed with labour costs and will move operations around the world based on lower labour costs. We now scratch our heads and wonder if exporting jobs to China (one of HBR’s silver bullets) was a good thing. You only have to look at organisations which once straddled the world like Colossi to see the long-term damage Friedmanites do. You can think of your own examples, but you might start in Detroit.
Can the two mindsets exist in one person? I don’t think so.
Then there is the question of education. Lean relies on the trickle-down model: train the leadership and inspire them and that enthusiasm will cascade downhill to the Gemba. How does this work if very few leaders or managers, if any, have had any coaching experience or training? How can this work if the Training & Education budget goes south with declining profits?
By now, if the movement had followed Toyota’s example it would have “democratised” Lean knowledge so that it could be taught to young people aged 16-20. Imagine a 20-year-old entering the world of work with a sound knowledge of A3 and the ability to coach someone with their improvement proposal. I could go on, but I hope you get the picture. The movement could be giving them the knowledge to make better choices about employers: do I go for the highest salary or the guarantee of being encouraged to develop through Life-Long Learning (a much-abused phrase)?
The movement must stop hiding in the bushes when it comes to confronting the Business Schools that churn out mini-Friedmanites by the million each year. MBAs can find an anomaly in a large spreadsheet from outer space, but ask them to encourage learning in their teams and you might as well be speaking academic Zogg.
Finally, I don’t see the movement showing any concern about sustainability. The LEI emails I receive often talk about growth, but is this growth based on age-old extractive practices or much more local and circular economies? Emeritus Prof Doc Hall, in his book, Compression (which I bought at a Lean Conference in Cardiff) talks about Reuse -> Repurpose -> Recycle in that order before gouging out more raw material and then watching the waste flood the oceans. The very poor in countries like India (a.k.a. the BOPs) do this to keep their noses above water. Can we, with humility, learn from them, those with little or no education who are, perhaps, better at avoiding or eliminating OUR waste than even Toyota.
When new ideas arise there is both a sending end and a receiving end. Whenever we come up with (‘send’) an idea that catches on quickly we may overlook the serendipity that the receiving end happened to be ready to receive the idea, like an impedence match.
We may have overlooked how readily the messages of ‘eliminate waste’ and ‘reduce cost,’ as well as the term “Lean” itself, fit into neoliberal business philosophy, which the Reagan administration and others had moved into high gear. We probably would not have seen the rapid success in widely spreading Lean without the concomitant neoliberal business mindset on the receiving end.
As the definition of Lean now expands beyond Lean tools and eliminating waste it creates an adoption problem. The problem is that while Lean’s original focus on eliminating waste and cost reduction found interest in thousands of western organizations, there will be far fewer organizations that are readily interested, willing or able to adopt Lean’s expanded form.
One lesson? If your idea catches on quickly then it could be an indication you are operating within an existing paradigm and are engaged in a kind of paradigm confirmation. Conversely, if you have a good idea but it is taking a long time to get traction you may be operating outside of prevailing paradigms and are engaged in trying to change them.
When the prevailing paradigm on the receiving end differs significantly from the sent idea, you are working on a transformative idea. In that situation acceptance may take a long time or perhaps never happen. Consider how long it took for the Theory of Evolution or VanGogh’s art to gain acceptance. It depends on how things unfold in the future, which no one can foresee.
I’m glad to see references here to scientific thinking, which is a content-neutral ‘meta skill’ that can serve humans well no matter where the future goes. Having the workplace serve as the classroom for scientific thinking, with managers as the teachers (coaches), is indeed a transformative idea that is hopefully finding its impedence match. That’s what the Toyota Kata community is working on.
Here’s a little 3-minute video that nicely illustrates it:
–> https://www.youtube.com/watch?v=QEpSMGdbepE
Dear Dan,
This an excellent article, thank you.
However, there are a few concerns I have about the Lean movement.
The first, is the impression given of Lean lurking in the shadows when it comes to challenging what is taught in B-schools to MBA students. This seems to be a combination of the gospels according to Fred Taylor and Milton Friedman. Why hasn’t Lean been able to convince the elite schools (the others will follow) that it is the foundation, not an option under something called Operation, of a good leadership degree?
Does anyone still remember Tennessee Ernie Ford’s global hit in the 50s, Sixteen Tons, a reflection of Taylorism of which Konosuke Matsushita had some trenchant things to say back in 1979? Do MBAs coming off the mass-production lines of the B-schools still believe that the typical worker has a “mind that’s a-weak and a back that’s strong”? When you combine that with the neoliberalism encouraged by Friedman’s edict of maximising shareholder value, can one wonder why Lean is a hard sell? Why are education and training nice-to-haves when profits are not going south?
My second concern is that Lean relies on the learning equivalent of trickle-down economics. This relies on leaders at the top creating a Learning Organisation with world-class coaches inspiring people at the sharp end to tackle around 20 improvements every year. Since when has coaching been recognised as a core ability of any leader? Do MBA courses emphasise this as a fundamental skill? I’m with Aristotle when he said, “Give me the boy when he is seven and I will show you the man”. Lean should be looking at introducing some of its aspects to young people in secondary education, around the ages of 14-16: A3, for example. This will help them take part in a better, more informed dialogue with their supervision. It might also help them make better choices when it comes to the employers they choose.
My final concern is that Lean should raise its sights and look at the changes the sustainability agenda is bringing. I remember Robert (Doc) Hall, once of this Lean parish, giving a lecture at the 2011 Lean Conference in Cardiff. He was promoting his book, Compression, and challenged us Leanies whether we were really engaged in reducing waste in all its forms. (John Bicheno had a knack for inviting speakers who did not preach to the choir.) If we are serious about saving the planet we will have to move from more global and extractive economies to more local and circular ones. He suggests Reuse -> Repurpose -> Recycle before gouging out more raw material. This is what the very poor do in countries like India. They lack good education but their creative solutions (termed “jugaad”) are well known even if some are a bit illegal or very dangerous. This brings me back to a previous point: the need to blow the MBA’s Taylorism out of the water because with the right, Lean leadership anyone can be encouraged to be innovative.
Dan,
Your thoughts are always spot on, but you still don’t make a convincing argument to overcome the new leader with different ideas, who always takes the organization backwards over time. Somehow we need to take a combination of the thoughts from the book The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America—and How to Undo His Legacy,
by David Gelles and break the stranglehold that “Blame” has on people, especially management. I truely believe that we all missed the other essential waste, blame. Most people assume that blame and taking responsibility are the same, but they are not. We have to pursue those parallel ideas to increase Lean success.
Dan Jones,
Totally outstanding, the complete Lean learning Curve from, “Lean LEARNINGS”, of People, Empathy & Lean Team Leadership to the Conclusion of STD Work, is constantly evolving to the Customer Needs and the demand of Equal Opportunities of True Lean Knowledge… “Top Down and Bottom Up”, every 24 hours a day = CI… “Change is Invariability” – as long as the entire “Clear”; communications of Team’s & Leadership are the same! Building a “Lean Groth Mindset”, that all understand & Improves Daily.
Ron San
There is no doubt that Lean is superior management system. Yet, a superior product does not always win in the marketplace of business ideas and methods. This is the unfortunate case for Lean. The competitive advantage aspect of Lean seems to no longer be a useful or relevant argument (selling point) for point. Lean’s focus on engaging and developing people at all levels via scientific thinking, and associated learning, has likewise had limited appeal. There remains a surprising unawareness or stubborn unwillingness to acknowledge the causal factors that explain many of the problems you cite and which limit Lean adoption (e.g., classical management, rights and privileges, path dependence, etc.). Extolling Lean’s many virtues and successes and corrective actions under the present frame are ill-suited for achieving meaningful change. While he shareholder-first business model is increasingly being questioned, it quietly remains in full force due to its attachment to sought-after social and political outcomes. The Toyota example does not inform solutions to these vexing problems. For that, one must look elsewhere.
Hi, “Bob”…
Yes, I agree in many aspects of your posting. (January 16, 2023 at 7:27 am)
IE: Quote – “The competitive advantage aspect of Lean seems to no longer be as useful or as relevant argument (selling point) for point.” Lean’s focus on engaging and developing people at all levels via scientific thinking, and associated learning, has likewise had limited appeal.
“The”, answer here, to your major question lies in a very simple exercise of “Question’s”, of Lean the TPS Way and those answers across the entire spectrum of from the “Very Top – Leadership” to the “Very Bottom Common Floor Sweeper”! They, the Company must all answer in the affirmative, to accept & unify the entire Community form the CEO to the Shareholders, even the one with just one share to the… Common Floor Sweeper! This must be in a Strategy to Fully Train & Retrain the Differences between a Lean Company at Lean Level I to Lean Level IV, Level V is unattainable forever, but a very small Job Site can come very close to a… Lean Level V in all aspect of True North Lean!
Without, this 110% Training Commitments; TPS Way of a True Lean Learning thru True Lean Training with a True TPS Way; “Lean Groth Mindset’s” of Strategy & Goals; All Global Business Models & all Lean Building Blocks, will fall apart, like the House of Cards in a light breeze, starting with the most obvious… Structure'(S) / Supplier(‘s) (VS’s) in any Global Corporation / Conglomerate down to the Smallest Worker – Job Shop – or the Share Holder with just one Share of Stock. This fall will start very quickly and repeat on & on up the ladder, until the CEO & CFO are removed, and a New Classical Management System is Installed in Place with a NEW Non-Lean Strategists(‘s) and Direction of Cash Flow… you see now – How Cash Talks & People Listen!
Behold, when cost’s rise & people rise to complain, the people are starting the light wind blowing, that the Global BOD’s hear very loudly! Alas another & another True Lean Company, without TPS True Lean Learning / Knowledge Pre-Training with a (True Lean Groth Mindset) the…”True TPS Way of training, all Lean will come crashing down and only one will be left standing. Yes, now one can see it for what it is. LEAN = “The TPS WAY”..of simple Lean Waste Removal’s, training, the (Lean Groth Lean Mindset) for all team employees as teams working together on a Global Scale in… a Common Linkage of Raw Materials to Finished Zero Defects Products Delivered JIT to the Customer of Demand!
Ron San